Moody's Investors Service has upgraded Sacred Heart University, Conn.'s long-term bond ratings to Baa1 from Baa2.

The rating outlook is stable at the higher rating level.

Moody's rates the university's revenue bonds, Series F A3/VMIG 2 based solely on a letter of credit from Bank of America, N.A. (expires 03/11/2018).

The Baa1 rating reflects the Sacred Heart's established market position with growing overall enrollment, particularly at the graduate level, consistently strong operating performance and cash flow generation as a result of management's conservative budgeting, disciplined fiscal oversight with a focus on cost containment and expense management and good long-term strategic planning.

Offsetting these factors are the highly competitive student market in which Sacred Heart operates, combined with a heavy dependence on student charges, a debt structure with a moderate level of risk and additional capital needs that will result in more debt in the near term.

The rating upgrade to Baa1 from Baa2 reflects the university's consistent total enrollment growth, solid balance sheet growth through retaining robust operating surpluses, and positive net tuition revenue trends coupled with a senior management team that exhibits conservative fiscal management, deliberate budgeting and planning processes and thorough benchmarking.

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